Tennessee consumer outlook plunges with fears of higher taxes, inflation

Outlook among Tennessee consumers has plummeted to an all-time low, according to the latest statewide survey by Middle Tennessee State University.

The Tennessee Consumer Outlook Index plummeted in September to a score of –106, down from 20 in June and also lower than the previous record low of -58 score in December 2020, reports the Office of Consumer Research in the Jennings A. Jones College of Business at MTSU.

“This precipitous decline in outlook was accompanied by growing concerns about inflation and consumers feeling worried, frustrated, afraid, sad, upset and angry about the current state of affairs with our nation and the economy,” noted Tim Graeff, marketing professor and director of the Office of Consumer Research.

“Recent events affecting our nation and economy are apparently not unexpected. Only 3% of respondents reported feeling surprised. These negative feelings and accompanying declines in outlook for the economy were felt in all three regions of the state.”

The current online survey of 555 Tennessee consumers was conducted between Sept. 9-29 and has an error margin of 4%. To see the full report and previous reports, go to https://www.mtsu.edu/consumer/tnoutlookreports.php.

Other survey highlights:

The top three reasons cited for concerns about the future of the nation and/or economy were: higher inflation, higher taxes and more business shutdowns because of COVID-19.

The Purchasing Situation Index and the Future Expectations Index are each at their lowest level ever.

Mounting concerns about declining values of investments and savings can also significantly inhibit consumers’ desire to open up their wallets and increase spending.

“Overall, these results are sobering news for local businesses and retailers,” Graeff added. “Given that two-thirds of the U.S. economy is from consumer spending, declines in consumers’ outlook for the future can cause significant delays in economic growth.”

The Consumer Outlook Index scores are based on consumers’ responses to 11 questions measuring their perceptions of the current economy, the future economy, jobs, personal finances, and whether now is a good time to make large purchases. The index, which includes three subindices, is computed by adding the percentage of favorable responses to each question and subtracting the percentage of negative responses to each question.